Scam auto warranty sales are rolling again

With cold weather looming, tis the season for scam auto warranties to come flowing into mailboxes. Warranties are often like a bad car battery in the winter – sometimes you don’t know it won’t work until you need it. There is a new round of “urgent” warranty expiration letters and cards hitting the mailboxes of consumers. These cards and letters, often full of misinformation, claim immediate action is needed to prevent expiration of your car’s warranty. The Better Business Bureau warns, however, most often these notices are not from your car’s manufacturer but are being sent by third party warranty sellers.

This is an ongoing problem – recently prompting the Federal Trade Commission to take action against a business selling scam warranties – resulting in refunds of nearly $4 million dollars to over 6,000 consumers.

The way the car warranty scam works is after receiving the card or letter the consumer calls the business as requested. They are then talked into purchasing an extended warranty. The problem is the warranty they purchase often turns out to be next to worthless.

That is the case for the 79 individuals who, in the last 12 months, filed complaints with the BBB. Some of them spending from a few hundred dollars to a couple thousand.

Additionally, along with the bogus warranty expiration letters and cards, some scammers place calls posing as manufacturer representatives trying to hook the consumer.

What to Do

If you receive a letter, postcard or telephone call advising you that your car’s express warranty is about to expire, check with the manufacturer. Don’t call the number that’s on any letter or postcard you receive, even if it looks like the communication is from the automaker. It could be a fake.

If you feel you must purchase a service contract, consider one offered by the manufacturer. Third-party contracts are notorious for fine print that excludes many types of repairs and for denying claims for anything the provider deems to be a pre-existing condition. Repairs required because of normal wear and tear also may be excluded.

Never agree to a contract for any product or service without reading terms and conditions, no matter how long the company says you have to change your mind. If a salesperson pressures you to make a purchase right away, hang up.

If you are receiving phone calls you can file a complaint with the FCC about suspected scam calls. In addition to being fraudulent in nature, these calls likely violate telemarketing and robocall rules. Report the scam to BBB Scam Tracker.

Dennis Horton is the Director of the Rockford Regional Office of the Better Business Bureau.